Tony Hsieh Archives - 6sigma

[Interview] Ask Tony Hsieh, CEO of Zappos

admin — Fri, 28 Feb 2025 05:55:57 +0000

Tony Hsieh, [1. Tony originally got involved with Zappos as an advisor and investor in 1999, about 2 months after the company was founded. Over time, Tony ended up spending more and more time with the company because it was both the most fun and the most promising out of all the companies that he was involved with. He eventually joined Zappos full time in 2000. Under his leadership, Zappos has grown gross merchandise sales from $1.6M in 2000 to $840M in 2007 by focusing relentlessly on customer service. In the spirit of transparency, you can follow Tony daily work and life on Twitter and on his Blog.] CEO of Zappos.com, is on shmula.com to answer your questions today.

Be sure to read our other interviews in our leadership series.

Update (12/23/2008):

Tony’s responses to the questions in the comment section of this post can be found in this 5-part series:

Similar to previous interviews we’ve held [2. Read More Leadership Interviews] — you, the readers of shmula.com, will have a chance to ask Tony anything you’d like in a structured and transparent conversation with a thought leader in customer experience management, a very successful entrepreneur, and a bona-fide social media freak (but has managed to use social media for the good of the company, adding value to its reputation, customer loyalty, and revenues).

Here are the Q&A logistics:

Ask your questions in the comment section of this post.
I will keep comments open until December 5, 2008.
Tony will respond to any, or all, or no question at all.
I will post his responses in succeeding posts beginning on December 12, 2008, so stay tuned to shmula.com!

To better frame your questions, here is a quick background on Zappos.com and Tony Hsieh [16. Tony focuses on continuing to grow the business at a rapid pace while maintaining the culture and feel of a small company. Prior to joining Zappos, Tony co-founded Venture Frogs with Alfred Lin. Venture Frogs is an incubator and investment firm that invested in Internet startups, including Ask Jeeves, Tellme Networks, and of course, Zappos.com. Prior to Venture Frogs, Tony co-founded LinkExchange, an advertising network that was successfully sold to Microsoft for $265M in 1998.]:

Zappos.com is a Service Company that happens to sell stuff. In their words,

Internally, we have a saying:
We are a service company that happens to sell ________.

shoes
and handbags
and clothing
and eyewear
and watches
and accessories
(and eventually anything and everything)

In terms of growth, below are their published numbers for Gross Merchandise Sales:

1999: Almost nothing
2000: $ 1.6 mm
2001: $ 8.6 mm
2002: $ 32 mm
2003: $ 70 mm
2004: $184 mm
2005: $370 mm
2006: $597 mm
2007: $840 mm
2008: Over $1 billion (goal)

What I find most fascinating about the company is their relentless drive for service to the customer as a core tenet. To engender a culture of service, Zappos subscribes to 10 core values:

Deliver WOW Through Service
Embrace and Drive Change
Create Fun and A Little Weirdness
Be Adventurous, Creative, and Open-Minded
Pursue Growth and Learning
Build Open and Honest Relationships With Communication
Build a Positive Team and Family Spirit
Do More With Less
Be Passionate and Determined
Be Humble

The internal chatter is good, but the proof is in the pudding and — indeed — they have managed to create legions of Zappos.com promoters, recommenders, very loyal return customers, and die-hard fans. Take this example of a customer wishing to return some shoes that didn’t fit her mother’s feet and, unfortunately, her mother passed away shortly after the customer requested to return the shoes:

When I came home this last time, I had an email from Zappos asking about the shoes, since they hadn’t received them. I was just back and not ready to deal with that, so I replied that my mom had died but that I’d send the shoes as soon as I could. They emailed back that they had arranged with UPS to pick up the shoes, so I wouldn’t have to take the time to do it myself. I was so touched. That’s going against corporate policy.

Yesterday, when I came home from town, a florist delivery man was just leaving. It was a beautiful arrangement in a basket with white lilies and roses and carnations. Big and lush and fragrant. I opened the card, and it was from Zappos. I burst into tears. I’m a sucker for kindness, and if that isn’t one of the nicest things I’ve ever had happen to me

It’s incredible that a $1 Billion dollar company can still do the little things like this that make such a huge difference.

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Tony Hsieh, CEO of Zappos, Part 1

admin — Fri, 28 Feb 2025 05:55:56 +0000

Two weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to respond to readers’ questions. Today is the first installment to those questions.

Be sure to read our other interviews in our leadership series.

Also, feel free to jump to other parts of the interview found below:

Interview Questions from shmula.com blog readers
Tony Hsieh, CEO of Zappos, Part 1
Tony Hsieh, CEO of Zappos, Part 2
Tony Hsieh, CEO of Zappos, Part 3
Tony Hsieh, CEO of Zappos, Part 4
Tony Hsieh, CEO of Zappos, Part 5

Comment by Mack on November 26, 2008 @ 9:15 am

I think its great how focused you are on the customer. How do you financially justify going the extra mile and making cash money? Isn’t there a tradeoff? Are MBA programs, on the wholesale, wrong on this tradeoff assumption?

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Tony Hsieh’s Response…

The #1 driver of our growth has been through repeat customers and word of mouth. We simply decided to put most of the money we would have spent in paid advertising into the customer experience and customer service instead, and let our customers do the marketing for us through word of mouth. We still have financial goals to make, we just choose to invest more in customer service than in paid advertising.

Comment by Karen Wilhelm on November 26, 2008 @ 9:26 am
I have some wow experiences with Zappos. I placed an order in the evening on Memorial Day a couple of years ago. My shoes were at the door the next day!

I dont understand, however, how Zappos can have free shipping and free returns (for 365 days, I believe)in some cases. My daughter-in-law orders a lot of shoes at one time, then returns most or all of them. I’ve done the same, and I feel bad about doing it. Can this be financially viable?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Tony Hsieh’s Response…

It depends on how much you and your daughter-in-law talk about Zappos to your friends and family. Obviously if you are returning every single shoe you order, then we’re losing money on that specific transaction. But our hope is that it’ll still be such a great experience for you, that you’ll tell your friends and family about Zappos. So rather than feel bad about it, instead just think spread the word about Zappos and think of that as your way of paying us back for the extra expenses.

Go to Part 2

And be sure to read our other interviews here:

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Tony Hsieh, CEO of Zappos, Part 2

admin — Fri, 28 Feb 2025 05:55:56 +0000

Two weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to respond to readers’ questions. Today is the second installment to those questions, the first installment can be found here.

Be sure to read our other interviews in our leadership series.

Also, feel free to jump to other parts of the interview found below:

Interview Questions from shmula.com blog readers
Tony Hsieh, CEO of Zappos, Part 1
Tony Hsieh, CEO of Zappos, Part 2
Tony Hsieh, CEO of Zappos, Part 3
Tony Hsieh, CEO of Zappos, Part 4
Tony Hsieh, CEO of Zappos, Part 5

Comment by Gary James on November 26, 2008 @ 10:43 am
Zappos recently laid-off some of the workforce. I have a few questions:

1) How is morale these days?
2) Everyone is expecting a really tough Q4, what is Zappos doing to mitigate the effects of the downturn?

Morale was obviously down in the days immediately following the layoffs, but it’s been over a month now and morale is definitely much better.

We are watching our expenses closely and being proactive about reducing expenses, which was the reason for the layoffs. You can read more about the layoffs here and here.

Comment by Bail Me Out on November 26, 2008 @ 10:48 am
Given your predisposition for the customer, what is the right thing to do with the Big 3 Automakers? It seems to me that bailing them out is more about the employees and the US Economy as a whole than it is about peoples experience with Ford, GM, or Chrysler. Would Tony Hsieh bailout the Big 3 Automakers?

I actually don’t know enough about the details of the bailout or how the Big 3 Automakers’ companies work internally to be able to give a good answer to this. I will say that in general, I think we should try to support companies that provide the best customer experience and customer service.

Comment by Dustin Robertson on November 26, 2008 @ 1:22 pm
Your free next day air promotion in 2007 skyrocketed your growth. Have you looking into cutting marketing expenditures to fund benefits for the customer like fast shipping?

Yes, most of the money that we would have spent on paid advertising/marketing we’ve put into the customer experience, including free/fast shipping.

Comment by Nancy Low on November 26, 2008 @ 3:13 pm
I see Zappos participating at leadership events – How do you measure your ROI on leadership development within your organization?

We don’t really measure ROI on that. We fundamentally believe that great leaders build great teams, and great teams can add orders of magnitude more value to a company than mediocre teams.

Comment by chad on November 26, 2008 @ 3:26 pm
I would like to know what Zappos is doing to monitor your brand on social sites like Twitter and MySpace. How many employees do you have monitoring social sites, and what is your strategic response when something negative is said?

We don’t really have anyone whose full time job is to monitor social sites. We introduce Twitter to all new employees during orientation, and we currently have hundreds of employees using Twitter: http://twitter.zappos.com/employees

Many employees, including me, monitor mentions of “Zappos” on Twitter simply because they are passionate about Zappos and about Twitter.

Go to Part 3

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Tony Hsieh, CEO of Zappos, Part 3

admin — Fri, 28 Feb 2025 05:55:56 +0000

Two weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to respond to readers’ questions. Today is the third installment to those questions, here are the first and second installments.

Be sure to read our other interviews in our leadership series.

Also, feel free to jump to other parts of the interview found below:

Interview Questions from shmula.com blog readers
Tony Hsieh, CEO of Zappos, Part 1
Tony Hsieh, CEO of Zappos, Part 2
Tony Hsieh, CEO of Zappos, Part 3
Tony Hsieh, CEO of Zappos, Part 4
Tony Hsieh, CEO of Zappos, Part 5

Comment by Dave on November 26, 2008 @ 6:36 pm
What are your plans for international expansion? Which markets do you see first, and why?

We actually ship internationally today, but it’s from the US so shipping and duties/taxes make it expensive. To do it right, we would need to set up warehouse operations in other countries, which we aren’t planning on doing anything soon. Right now we’re focused on expanding into other product categories beyond shoes in the US (such as clothing).

Comment by kc on November 26, 2008 @ 8:40 pm
This is a general business question: What is your advice on working within a de-centralized organization and being charged with growing the e-commerce portion (approx. 15% of the whole) within the realm of a traditional company offering little support or understanding of the business model?

If you can get the support and funding for it from the parent company as essentially a separate business, I would try to get the green light to build out your own culture, HR policies, etc. and have the parent company leave you alone and let you run your own show as long as you’re meeting your financial goals.

Comment by Ben Shin on November 26, 2008 @ 9:04 pm
Hi Tony – Zappos started with the shoe category and is now selling other stuff. In one sense, Zappos is becoming more and more like Amazon. What is different between Zappos and Amazon?

While it’s true that we’re in many of the same product categories, we don’t really think of Amazon as a competitor. Wal-Mart and Nordstrom are both in many of the same product categories, but nobody thinks of them as competitors.

Amazon is really more about being a market place where you can find the best value. There are many 3rd party sellers offering products on Amazon.com.

For Zappos, we just want our brand to be about the very best customer service and customer experience, which is why we’ve stayed away from the “easy money” of having other 3rd party sellers on the Zappos.com site, because we can’t control the customer experience as well when dealing with 3rd party sellers.

Comment by Edward Cullen on November 26, 2008 @ 9:05 pm
Have you seen Twilight yet? Did you like it?

I have not seen it yet!

Comment by Jeremy Hanks on November 27, 2008 @ 2:29 am
What are your thoughts about drop shipping/supplier direct fulfillment? Id imagine that at some point as you expand into other categories, youll find yourself limited by space and $ that youre willing to tie up in inventory. How would Zappos approach a strategy to use virtual inventory as a way to provide deeper SKU options for your customers? – Jeremy Hanks, Cofounder Doba

This is not something we would consider doing under the Zappos brand even though it would result in more sales and higher profits because we can’t control the customer experience.

Comment by Nathan on December 1, 2008 @ 11:49 am
What leadership lessons have you learned in your time as CEO? Also, what mistakes have you made and how did those mistakes change you and change the company?

I think the biggest lesson I’ve learned is that there is a lot more hidden talent and potential in your employees than you think. It’s just about building the right culture and figuring out how to unlock all of that talent, which isn’t always an easy thing to figure out.

We’ve made a lot of mistakes at Zappos, but in general I think we do a pretty good job of learning from those mistakes. If we weren’t making mistakes, then I would say we weren’t taking enough risks.

Our biggest mistakes in the past have probably been related to hiring the wrong people, especially those that were bad for the company culture. It’s actually made our culture stronger today because we want to try to avoid making the same mistakes.

Go to Part 4

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Tony Hsieh, CEO of Zappos, Part 4

admin — Fri, 28 Feb 2025 05:55:56 +0000

Several weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to respond to readers’ questions. Today is the fourth installment to those questions, here are the first, second, and third installments.

Be sure to read our other interviews in our leadership series.

Also, feel free to jump to other parts of the interview found below:

Interview Questions from shmula.com blog readers
Tony Hsieh, CEO of Zappos, Part 1
Tony Hsieh, CEO of Zappos, Part 2
Tony Hsieh, CEO of Zappos, Part 3
Tony Hsieh, CEO of Zappos, Part 4
Tony Hsieh, CEO of Zappos, Part 5

Comment by Joe Rawlinson on December 1, 2008 @ 11:59 am
How do you think great customer service will influence customers in a slow economy when many are becoming more price focused?

We definitely think some customers will be more price-sensitive, so we actually have a separate web site called 6pm.com that caters to those customers. However, so far we’ve found that our existing customers on Zappos.com continue to buy from us because of the service they experienced from us in the past.

Aside from the layoffs that weve heard about, how else are you cutting expenses to stay profitable?

We are watching all of our expenses and doing everything we can to be more efficient in our paid advertising, our operations, and our buying and managing of inventory.

How do you balance expense cutbacks with continued investment so you can gain market share over competitors?

It’s always a tough balancing act, but basically we take our financial goals and work backwards from there. We try to deliver the best customer service and customer experience we can while still meeting those financial goals.

Comment by Brad Briscoe on December 1, 2008 @ 3:17 pm

How do you set and monitor quality standards for the shoes and other products you offer so that product quality matches your service quality?

It doesn’t happen very often, but if there is a quality issue with a brand or a specific style, we usually hear about it pretty quickly from our customers and then we’ll manually check all the product we still have in our warehouse for either that brand or that style.

Comment by Marquis Parker on December 2, 2008 @ 7:17 am

Im a frequent shopper at Zappos. As a customer, I noticeably observe Supply Chain and Service Excellence, but I have one question: the site seems to be lagging behind both, in terms of innovation, usability, and current-ness. The site is a way-back of the early nineties; a link-farm of sorts.

Don’t get me wrong Im still very loyal to Zappos, but the site is clearly behind, but Fulfillment and Service Excellence are top-notch.

We are actually in the process of launching a new site.

Comment by Thomas on December 5, 2008 @ 3:28 am

How do you ensure that the people you hire into Zappos actually believe in your company culture and core values and arent just paying them lip service to get through the interview process?

Through experience, our recruiting and training teams have gotten pretty good at figuring out who is a good culture fit and who isn’t. It isn’t just about the words they say, it’s about their attitude.

Also, a lot of the questions we ask aren’t typical interview questions, so it’d be hard for someone who only wants to say the right answers to know how to answer them because they don’t know what we’re actually looking for.

For example, one of our questions is: “On a scale of 1-10, how weird are you?”

Comment by Cheri Register on December 5, 2008 @ 9:03 am

Given the increasing diversity of the population in the US, why is it so difficult to buy womens shoes in sizes smaller than 6? When 5s are available, which seldom happens in shoe stores, they are usually narrow in width. My daughter has a fairly typical Korean body type, with short, medium to wide feet. She cant be the only one frustrated with trying to find shoes that fitespecially fashionable womens shoes, not childrens sizes. Someone must want to serve this market.

In the brick and mortar world, it’s a matter of supply and demand, and the reality is that there isn’t enough demand for it to make sense for a lot of brick and mortar retailers to offer those types of sizes.

It’s a different story with online retail, but because most shoes are still sold offline, it still may not make sense for some brands to manufacture special sizes. Hopefully with time this will change though!

Comment by jamie rozansky on December 7, 2008 @ 11:01 am

I am a director of operations in a small/midsize company, under 100 people. We pride ourselves on building our business based on customer service. I am so impressed and inspired by your organization, that I would love to know what you do to compansate, and reward your customer service reps. Is there a specific method you use? How do you combat negativity?How do you expand your business and maintain your culture?

I would love to be an intern in your office and experience your operation. I have been equally satisfied by all of my personal experiences as a consumer dealing with Zappos. I have never been disappointed, nor experienced anything but consistant friendliness and service. I would love to learn from you, so that I can share your service model in our industry and business. Please feel free to contact me. Thank you

We actually offer tours at our headquarters in Las Vegas where many of these questions are answered, so I would suggest you come visit us. Just send an email to tours@zappos.com to schedule your visit!

We’re also happy to have you spend more time with the managers of our call center, recruiting team, training, etc. – just be sure to mention this in your email. (We’ve had companies such as Southwest Airlines and Lego come and spend an entire day with us.)

Also, we are about to launch Zappos Insights, in which we can go into more specifics for all of these questions:
http://www.zapposinsights.com

Go to Part 5

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Tony Hsieh, CEO of Zappos, Part 5

admin — Fri, 28 Feb 2025 05:55:56 +0000

Several weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to respond to readers’ questions. Today is the fifth and final installment to those questions, here are the first, second, third, and fourth installments.

Be sure to read our other interviews in our leadership series.

Also, feel free to jump to other parts of the interview found below:

Interview Questions from shmula.com blog readers
Tony Hsieh, CEO of Zappos, Part 1
Tony Hsieh, CEO of Zappos, Part 2
Tony Hsieh, CEO of Zappos, Part 3
Tony Hsieh, CEO of Zappos, Part 4
Tony Hsieh, CEO of Zappos, Part 5

Comment by Rob on December 8, 2008 @ 2:51 pm

What are your thoughts on the thesis of that book “The Best Service is No Service: How to Liberate Your Customers from Customer Service, Keep Them Happy, and Control Costs”? Do you agree that eliminating the need for the customer to contact the company is a good thing?

I personally hate dealing with any customer service and wish that companies made it easier for customers to have good experiences. Having to call customer service is a failure in the company and is sometimes made worse when customer service isnt good. There can be two failures I guess.

I haven’t read that book, but I think it really just depends on what makes for a better customer experience. There are definitely cases where a self-serve model is a better customer experience, and there are times when it isn’t.

. . . the telephone, as low tech as it may sound, is also a great way of really connecting personally with customers. So that’s actually why we’re very different from most web sites that try to hide contact information.

We actually have our 1-800 number on every single page of our web site because we actually want to talk to our customers and when customers talk to us for five to ten minutes we have their undivided attention and that’s really the best opportunity to brand ourselves as a company that unlike most companies, actually wants to take care of our customers.

This is a 5-part series of interview with Tony Hsieh, CEO of Zappos.com; the series can be accessed below:

And be sure to read our other leadership interviews:

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Amazon and Zappos Sitting in a Tree

admin — Thu, 23 Jul 2009 03:47:38 +0000

As most you know by now, Zappos has entered into a definitive agreement with Amazon.com and will become a wholly owned subsidiary of Amazon. This is exciting and, after speaking with my friends both at Amazon and at Zappos, they are all quite excited too. Congratulations to Amazon, Zappos, Tony Hsieh, and Jeff Bezos [1. See Jeff Bezos on Kaizen] [2. See Jeff Bezos on Root Cause Analysis] [3. See Jeff Bezos on Lean Thinking] [4. See Jeff Bezos on Taiichi Ohno] [5. See Jeff Bezos on the Fallacy of the Long Tail] [6. See Amazon.com on Loyalty] [7. See Amazon.com and Working Backwards] [8. See Jeff Bezos on Six Sigma] [9. See Jeff Bezos, Amazon.com, Customer Obsession].

In honor of their “marriage”, I’ll repost an interview I had with Tony Hsieh, CEO of Zappos.com:

~~~~~~~~~~~~~~~~~~~~~~~~~

This is a 5-part series where Tony Hsieh responds to over 20 questions submitted by shmula.com blog readers. Below is the post series:

Quotable from the series¦

We actually have our 1-800 number on every single page of our web site because we actually want to talk to our customers and when customers talk to us for five to ten minutes we have their undivided attention and that’s really the best opportunity to brand ourselves as a company that unlike most companies, actually wants to take care of our customers.

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Tony Hsieh, CEO of Zappos, Summary

admin — Mon, 19 Jan 2009 15:58:45 +0000

This is a summary post, highlighting the 5-part series where Tony Hsieh responds to over 20 questions submitted by shmula.com blog readers.

Below is the post series:

Quotable from the series…

We actually have our 1-800 number on every single page of our web site because we actually want to talk to our customers and when customers talk to us for five to ten minutes we have their undivided attention and that’s really the best opportunity to brand ourselves as a company that unlike most companies, actually wants to take care of our customers.

The post Tony Hsieh, CEO of Zappos, Summary appeared first on 6sigma.